National Securities’ Art Hogan believes inflation will not be a problem for Wall Street this year.
He acknowledges the increase in Treasury yields, which usually put pressure on future growth. But in this case, Hogan sees an epic return on corporate revenue that mitigates the impact.
“We will see an explosion of economic activity,” the company’s chief market strategist for CNBC’s “Trading Nation” said on Friday. “The economy will do better in the back half of this year, as we normalize ongoing vaccine activities and the number of viruses is declining.”
Last week, the 10-year reference yield of the treasury increased by almost 12% to 1.34%. However, the yield is still considered low by historical standards.
“It’s important to understand why it’s growing – compared to what happens if it gets too big and starts attracting money from stocks and fixed income,” he said. “We are not yet close to this level.”
According to Hogan, prices will continue to rise. However, record rates of personal and corporate savings should also dampen higher prices caused by the recovery and increase in demand.
“It simply came to our notice then [prices] there will be transients, and some of them will be permanent changes, “he said.” For example, semiconductor chips are on fire right now because there is a shortage of them. It prevents carmakers from producing cars. “
“We have a balanced approach”
Hogan, which oversees $ 15 billion in assets under management, uses an investment strategy in its portfolio of 60% equities and 40% bonds.
“We have a balanced approach to technology and cycles,” he said. “Every two months, we make sure the bar is even.”
Over the next few days, Hogan plans to add name technology and growth to balance the gains accumulated in the cycles. He used this strategy throughout the coronavirus crisis.
“Over the last 20 years, some of the best bull markets we’ve seen have been in rising yielding environments,” he said.
Hogan has a S&P 500 price target at the end of the year of 4,300, which implies a 10% increase since Friday’s close.
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